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Hello Fellow ChartWatchers!

(This is a repeat of an article I wrote in 2007.  Seems like now is a great time to review its message. - Chip)

Last month I had the pleasure of sitting in on several local Technical Analaysis User Groups and seeing how they used many different tools to do group stock analysis. It was a very educational experience for me and I strongly recommend that everyone reading this newsletter join your local technical analysis user group. (If there isn't one in your area, why not start one?) Doing technical analysis with other people is probably the best way to improve your investing success - period.

But as I was sitting in the back of one of the classes, I watched them fall into one of the more insidious "traps" in technical analysis these days. See if you can spot it as I tell the tale:

The group was looking at an ETF for one of the more interesting market sectors these days. The person running the meeting pulled up a chart of the ETF on the screen for everyone to see (I was happy it was a StockCharts.com chart!). Someone in the group commented that the chart had a possible "double top" pattern and they were right - it certainly looked like a double-top. Someone else chimed in that the volume bars appeared to confirm that double-top hypothesis (I thought to myself "Yea! They are using volume to confirm chart patterns!") The group leader then suggested that they add some indicators to the chart to see what they showed - so they added a MACD and a Chaiken Money Flow plot to the chart. The MACD looked weak, but the CMF looked bullish. This caused the group to pause and check out a couple of other CMF plots with different parameters. Hmmmmm. Most of the CMF's were bullish. Eventually, the group decided to ignore the CMF data and move on.

Anyone spot the problem yet?

First off, the problem was NOT that the group ignored conflicting information from the CMF plot - it is very common that some indicators will be bullish while other ones are bearish. You need to think about which indicators you trust more and why. In this case, the group discussed it and decided that they trusted the MACD signals and the double-top chart pattern more than the CMF and that was a good decision.

The problem comes from the nature of ETFs. ETF stands for "Exchange Traded Funds" and they are all the rage right now. These are financial vehicles that are designed to track some index very closely and can be traded just like a stock. They are very useful to investors and the number of ETFs has increased dramatically in the past couple of years.

A typical example of an ETF is SPY which tracks the S&P 500 ($SPX). If the S&P 500 index goes up, SPY goes up. If $SPX goes down, SPY goes down. You can buy and sell SPY much easier than you can buy and sell the 500 stocks that make up $SPX and so SPY is a very useful tool in many investors' arsenals.

Have you spotted the trap yet?

Before I reveal the problem, let's look at two charts. Here is a chart of $SPX and one of SPY. See if you can spot the key difference:

Look at the On Balance Volume indicator line. Notice the difference in the direction of those lines? I've added a moving average line to each plot to help you see that the OBV for $SPX is going up while the OBV for SPY is going sideways/down.

Have you spotted the trap yet?

The price plots for $SPX and SPY look extremely similar - just as they should. When $SPX goes up, SPY goes up and vice-versa. But now look at the volume bars. They don't look identical do they? First off, the volume scales are very different - $SPX ranges from 2 Billion to 6 Billion while SPY's volume ranges from 200 Million to 600 Million. But the bigger problem is that the "shape" of the volume bars aren't exactly the same. They are similar - but there are subtle differences in the position and magnitudes of the taller volume bars. Those differences are what caused the OBV plots to be different. But why would the volume plots for $SPX and SPY be different? Could this be the trap? Will Chip ever get to the point!?

ETFs are different from stocks because of this fact: While the price of an ETF closely tracks the underlying index's value, the volume of an ETF only reflects the popularity of the ETF itself - NOT THE SUPPLY OR DEMAND FOR THE THING THE ETF TRACKS.

Consider the following hypothetical example: Let's say that for some reason an amazingly rich Jillionaire decides that they wants to invest in the market - so they buy 1 Billion shares of SPY in a single day. What would SPY's chart look like?

Despite all of this new demand for SPY, SPY's price chart would continue to mimic the value of the S&P 500 index. It would go up and down in the exact same way as before, just like $SPX does. Of course SPY's volume would have a HUGE spike in it, but that volume spike would have no impact on the price of SPY.

Now consider what would have happened if our hypothetical Jillionaire had invested in a real stock instead of an ETF. In addition to a huge spike on the volume chart, there would also be a huge jump in the price of the stock since the price of a stock is directly related to the demand for that stock's shares.

The key point here is that many kinds of technical analysis make an assumption that is not always true for ETFs. Any form of T/A that relies on studying both price and volume - including chart pattern analysis and price/volume indicators like the CMF - assumes that volume and price are directly related. Since there is no direct relationship between price and volume for an ETF, those analysis techniques should be used very carefully when looking at ETFs.

(Note: The volume for popular ETFs like SPY actually do a pretty good job of mimicking the demand for the underlying index, but that is due to indirect factors. As shown in the charts above, sensitive indicators can be thrown off by those differences. In the case of less popular ETFs, the differences are even greater.)

As I sat in the back of the class observing the give and take around their study of the ETF, I thought about speaking up. Unfortunately the class was almost over and I was late to my next appointment. Fortunately for you, I made a note to myself to write about it in the next newsletter.

- Chip

Hello Fellow ChartWatchers!

As I travel around the country talking to various investment groups, I always make a point to remind everyone about the what I call "The Technical Process" - the steps that every investor goes through before taking a position in a stock.  Some people get so caught up in the details of this process that they lose track of the "big picture" so I created this diagram to help re-focus people:

The goal of any serious investor is to continually develop a set of signals that they trust and then use prudent money-management techniques to limit losses and profit from gains.

In this context a "signal" is anything that causes you to consider buying a particular stock.  It could be a mention in a newspaper, a technical indicator crossing some value, a broker recommendation, a "hot tip" from a neighbor, etc.  Regardless of the source of the signal, the first thing everyone has to ask themselves is "Do I trust this signal and if so, why?"

Technicians work to develop well-defined, objective, repeatable signals based primarily on price and volume data.  Such "Technical Signals" can then be analyzed, reviewed and evaluated to see if the stocks that they select meet the technician's goals.  The process is not easy.  It requires a fair amount of time and dedication.  It never really ends either since good technicians are always looking to improve their results.  But the process is very worthwhile in the long run and the diagram above should help you stay on track.

Some people skip the "Research, Study, Plan" phase almost entirely while other people never leave it.  Our ChartSchool area is a great place to start and our bookstore contains many more sources of information.  But remember, while learning about technical indicators and trading strategies is very important, there is only so much one can learn by reading.  In order to truly understand how fear and greed drive markets, you need to combine research with participation.

Selecting signals is a combination of science and art.  Again, there are no 100% accurate signals and signals that work for one person may not fit with someone else.  My strong advice is to start simple and build up over time.  When in doubt, start with a simple MACD Crossover signal and build from there.

Our ScanEngine can help you see how many stocks meet your current signal criteria.  The goal is to create a scan that returns a "manageable" number of stocks - anywhere from 2 to 50+ depending on your tolerance for chart analysis.  If your scan returns too many stocks, consider adding price and/or volume constraints to reduce the number of results.  If your scan returns zero results, remove clauses one-at-a-time until a non-zero number of results appear.

Learning to create and run technical scans effectively is crucial to your success as a technical investor.  Unfortunately it can take time to learn the ins and outs of scanning but again, the rewards are well worth the time and effort needed.

Once your scan returns a reasonable number of results, you should then review the chart of each result carefully to see if it is the kind of stock you'd be interested in buying.  If all of the stocks look "wrong" to you, you should probably start the process over again with a different signal.  If most of them look good but a couple are odd-balls, just delete the odd-balls and keep going.  As the lines show, this is an iterative learning process that takes time.

The steps for placing your trade, monitoring it and managing your risk - collectively known as the "mechanics of trading" - are something that other people have covered extensively so I won't go into it in this article except to say that money/risk management is another required skill for technical traders.

The last bubble on the chart says "Evaluate Trade."  Implied in that phrase is that you maintain and review a trading journal.  It could be as simple as a pad of paper and a pencil or as complex as a private database.  Regardless, note down the reasons for entering your trade, the expectations for the trade, the ultimate results and lessons learned.  Use your journal to improve your research as you start the entire technical process again.  Over time, your trust in your signals will increase and your results will improve.

Remember, for successful investors, this process never ends.

- Chip

Hello Fellow ChartWatchers!

Happy New Year!  The response to our upcoming conference has been amazing. Since we announced our first ever get together for StockCharts users, over 100 people have registered.  They will be joining myself, John Murphy, Arthur Hill and the rest of the StockCharts team in Seattle this coming August for three days of in-depth technical analysis education and some great evening events.

As I said before, if you use StockCharts to make investing decisions, you owe it to yourself to attend this conference.  The current version of the agenda (subject to minor changes):

Friday, August 12th

The conference kicks off on Thursday, August 11th with a series of presentations we're calling "StockCharts University" that focuses on the fundamentals of Technical Analysis.  And on Saturday, we dig even deeper into the website including topics like scanning and market indicators.  The agenda for the entire conference can be found here.

Beyond the conference sessions themselves, we're going to have three great evening events - a Northwest Wine Tasting, a Sunset Dinner Cruise on Puget Sound, and club-level seats at a Seattle Mariners/Boston Red Sox's game!  Every event will provide lots of time to mingle with StockCharts experts and other users like yourself.  I am really looking forward to those events.

If you register now, the cost of the conference is only $295 and that includes 1 year of our Extra charting service - a $250 value.  That means that as of right now the effective cost for the conference is less than $45.  That is a seriously good deal.

BUT THAT'S ONLY IF YOU REGISTER BEFORE THE END OF JANUARY...

Because of the way hotels charge for conference space, after January 31st we have to raise the cost of the conference to $395.  It is still a great deal at that price - but it is a better deal now.  If you are considering attending, please don't delay and register now.

You can find all of the information about Seattle ChartCon 2011 on the ChartCon Homepage.  You can also use that link to register.  We've also created an FAQ page with additional details about the event.  Click here to see it.

I'm looking forward to meeting everyone in August,
- Chip

Hello Fellow ChartWatchers!

Another year has come and gone.  It seems like only yesterday that we were celebrating the start of the decade (heck, it seems like only yesterday we were celebrating the start of the new millennium!)

This year one of the things we focused on here at StockCharts we to increase the value of a StockCharts.com membership.  In order to see how we did, consider the following mythical subscriber, Fred.

Fred is an average investor who trades several times a month, owns about 10 stocks/funds, tracks about 200 different charts, and enjoys seeing real-time data.  Fred likes to keep up with what technical experts are saying about the market too.  He's knowledgable about charting, but doesn't consider himself a T/A expert.  "There's always more to learn" is his favorite saying.  Fred is watching his budget and doesn't want to overspend for anything so he prefers paying on a month-to-month basis.

Fred joined StockCharts in November of 2008 by subscribing to our ExtraRT+Market Message service.  At that time, ExtraRT gave him Real Time data and the ability to store more than Basic's limit of 100 charts.  Fred also wanted to read John Murphy and Arthur Hill's commentary.  He subscribed on a month-to-month basis for a cost of $45.90 per month.

By the end of 2009, Fred had spent $642.60 for 14 months of our ExtraRT+Market Message service.  He was happy with what he got but was looking for ways to lower his cost and increase his value.

Let's see how Fred got his wish in 2010...

In January of this year we introduced our Free Real-time service using data from the BATS exchange.  No more 20-minute delay on US stocks for non-ExtraRT subscribers!  Because he didn't need super-accurate real-time quotes, Fred immediately downgraded his account to our Extra service and lowered his monthly cost to $35.95.

In April Fred was really happy to see us add the "Inspector" feature that allows him to move his mouse over any chart and see the data values for any bar.

Though initially skeptical when we launched our new Facebook page in July, Fred gradually became a fan and he now enjoys the contests and giveaways we have there as well as the tips, quotes and article notifications.

In September Fred was thrilled to see our new YouTube video area open up.  He learned a lot of things he didn't know about his account from the "Getting Started with StockCharts" video and was able to re-organize his ChartStyles to greatly improve how he reviews his saved charts.

In October Fred was happy to see all of the new features that we added to the ChartNotes annotation program.  The Elliott Wave notation tool was his favorite, but he was happy to get all the new tools for no additional cost.

In November Fred was amazed to see that our Basic service had gained most of the features that he cared about: real-time data via BATS, up to 500 stored charts, up to 20 stored ChartStyles, and the ability to store annotated charts!  Fred immediately downgraded his account to the Basic + Market Message service lowering his monthly cost to $27.49(!).

On December 3rd Fred read on our Facebook page that the Market Message had just been made free for all subscribers.  He couldn't believe it.  That automatically lowered his monthly cost to $14.95.  He was now paying $30.95 LESS than what he was paying at the start of the year.  That's about 66% less than before!  But wait, there's more...

This week Fred wised up and stopped subscribing on a month-to-month basis.  Just yesterday Fred placed a 12-month order during our current Holiday Special.  That got him 14-months of service for $154.59 - a cost of just $11.06 per month.  That's 75% less than what he paid at the start of the year!

Finally remember that Fred paid $642.60 for 14 months of service prior to the start of 2010.  Now, he's paying just $154.59 for essentially the same capabilities.  Fred is beyond thrilled to see that his costs have gone down over $488 this year.  He can't think of anything else in his life that has had such a big increase in value.

Now, not everyone is in the same situation as Fred.  The cost savings this year will vary from member to member depending on the kind of service they need and the payment flexibility that they want.  But the bottom line is this:

In 2010, the value of a StockCharts.com membership increased significantly as many more features were added and charting packages were consolidated.

Our goal is to continue to increase the value of a StockCharts subscription in a huge variety of ways.  We can't wait to see all the great new features that 2011 will bring.

Happy Holidays to you and yours from everyone on the StockCharts team!

- Chip

Hello Fellow ChartWatchers!

Next August we are hosting the first ever gathering of StockCharts enthusiasts here in Seattle - a 3-day conference we're calling it "Seattle ChartCon 2011".  It's going to be a blast!

For 3 full days, myself, John Murphy and Arthur Hill are going to be giving in-depth presentations on everything that StockCharts.com can do.  If you use StockCharts to make investing decisions, you owe it to yourself to attend this conference.  Here's a sample of the agenda:

Friday, August 12th

And that's just for Friday!  On Thursday we're going to hold a series of presentations called "StockCharts University" that focuses on the fundamentals of Technical Analysis.  And of Saturday, we dig even deeper into the website including topics like scanning and market indicators.  The agenda for the entire conference can be found here.

Beyond the conference sessions themselves, we're going to have three great evening events - a Northwest Wine Tasting, a Sunset Dinner Cruise on Puget Sound, and club-level seats at a Seattle Mariners/Boston Red Sox's game!  Every event will provide lots of time to mingle with StockCharts experts and other users like yourself.  I am really looking forward to those events.

If you register now, the cost of the conference is only $295 (prices increase if you delay).  But wait!  Registering for the conference also gets you 1 year of our Extra charting service - a $250 value.  That means that as of right now the effective cost for the conference is less than $45.  That is a seriously good deal.

You can find all of the information about Seattle ChartCon 2011 on the ChartCon Homepage.  You can also use that link to register.

Please take a moment and think about how 3 days next August with StockCharts in Seattle could help your investing results.  Then register today to reserve your place at this amazing event.  I would love to see you there and meet you in person.

We've created an FAQ page with additional details about the event.  Click here to see it.

Happy Holidays!
- Chip

Hello Fellow ChartWatchers!

We are now halfway through our current plan for adding more value to every StockCharts.com subscriber's membership.  Two weeks ago, we doubled the amount of chart storage that Extra members get and we drastically increased the "freshness" of our Scan Engine results.  This week, we've increased the number of charts Basic members can store from 100 to 500 and we've given then access to many of the same features that Extra members have - i.e., multiple list views, storage for annotated charts, etc.

(At this point there are only 3 differences between Extra and Basic - Extra members get multiple ChartLists, Extra members get full scan results, and ExtraRT members get official real-time data instead of BATS data.)

All of these upgrades have been provided to our members automatically and for no additional fee and so far the reviews have been very positive:

"You have NO idea how happy you have made me. Because I work with industry sectors, the 100 chartlist limit is something that I've continually bumped into." - Leisa Deffenbaugh

"Thanks for the improvements. They are much appreciated and show your continued determination to remain #1. It would have been easy to sit back and just "let it roll" but you didn't do that. I've been with you for nearly 9 years and will continue, no question. The inclusion of Art Hill and John Murphy is an outstanding feature and also much appreciated. Keep it going! I love it!" - R. Rimrodt

So... that's it right?  All the improvements are complete.  Move along.  Time to get back to charting...

Actually, not quite.

We still have a couple more big changes up our sleeves that I wanted to let you know about.  All of these changes will make your StockCharts subscription even more valuable.  Here they are:

1.) Dynamic Chart Sizing!

I've mentioned this briefly before, but next week we plan on rolling out a new option in the "Size" dropdown for our SharpCharts.  The new option is called "Dynamic" and, if you select it, the chart will automatically resize itself to fit your browser window's size.  This is perfect for people that use multiple windows to view multiple charts.

2.) The Great Market Message Merger!

Here's another huge increase in value for all StockCharts.com subscribers.  Starting in December, we're going to automatically bundle in the StockCharts Market Message with all of our charting packages for free(!)  Soon anyone who subscribes to either our Basic, our Extra, or our ExtraRT charting service will automatically get access to the StockCharts Market Message written by John Murphy and Arthur Hill.

(If you already subscribe to the Market Message, we'll automatically extend your subscription to account for the change in pricing.  If you only subscribe to the Market Message, we'll give you access to our charting service for free.)

3.) I See London, I See France!

We've just gotten permission to provide charts of stocks from the two major European stock exchanges - the London Stock Exchange and the Euronext Exchange.  Initially we will be providing these charts to everyone on a delayed basis for free.  In a couple of months, we will start providing real-time versions to people who pay the exchange fees.

4.) Seattle ChartCon 2011 - Learn EVERYTHING About StockCharts.com From the Experts

We're throwing a party and everyone's invited.  Next August, for 3 days, we're going to hold a conference in downtown Seattle that is focused exclusively on helping you get the most out of our website.  Myself, John Murphy and Arthur Hill will give you in depth training on every aspect of every tool that StockCharts.com has.  We're still preparing the "official" agenda but rest assured that this conference will be well worth the time for anyone who's into charting.  Mark your calendar (August 11-13) and stay tuned for more details in the coming weeks.

Wow. That's a lot of stuff.  Which one are you most looking forward too?

- Chip

Hello Fellow ChartWatchers!

One of the things we are always trying to do here at StockCharts is "improve."  We are always trying to make the website better - faster, more powerful, more flexible, you name it.  We are also always trying to increase its value.  Today, I'm thrilled to announce two big changes that are happening which will GREATLY increase the value of a StockCharts membership.

(For all you skeptics out there, the price hasn't changed at all.  I'm announcing new features and improvements for the exact same price as before.)

FOR ALL OF THE EXTRA AND EXTRA-RT MEMBERS OUT THERE:

Many of you have been asking for more space to store large numbers of ChartLists.  Evidently, as people find more ways to categorize charts, they have outgrown our old limit of 100 ChartLists per account.  Many people have asked us for more space and now, we're happy to give it to them:

EFFECTIVE IMMEDIATELY, ALL EXTRA AND EXTRA-RT MEMBERS CAN NOW STORE UP TO 200 DIFFERENT CHARTLISTS IN THEIR ACCOUNTS!

Each list still holds up to 500 charts so that is double the space you used to have.  This feature is already enabled and waiting for you to take advantage of it.  Just login to your account and click the "Add a New List" link on the Members page.  We can't wait to see what you do with twice as much space as you had before.  Enjoy!

But wait, there's more!

Check out the "Site News" article below for more information about additional improvements we've made just for Extra members including my favorite - "Near Real-time Scanning!"

BUT WAIT, I'M A "BASIC" SUBSCRIBER.  WHAT ABOUT ME?

We're saving the best for Basic members.  In about a week, we're going to be upgrading our Basic accounts significantly.  Instead of only being able to store 100 non-annotated charts, soon Basic members will be able to store 500 charts AND those charts can be annotated.  In addition, Basic members will have access to all of the different "Views" that Extra members now have - including the MarketCarpet view, the CandleGlance view, and the Summary view.  Basic members will also be getting access ChartStyles, StyleButtons and much more.

In short, a Basic account will soon be identical to an Extra account except that a Basic account will only have a single ChartList.

(Again, these Basic improvements aren't available quite yet.  They will be rolled out in the next week or so.  Watch the "What's New" area for details.)

Now, that might sound like a lot improvements, but I'm just getting started.  Look for the announcement of another huge improvement that will give you even more value for the same cost in our next newsletter.  And then, in the first newsletter in December, I'll be announcing StockCharts.com's biggest surprise to date - something that I'm extremely excited about and can't wait to share with everyone.  Stay tuned!

- Chip

Hello Fellow ChartWatchers!

Today I want to answer a question that we get frequently - "Where do I start?  This is all so overwhelming!"

The answer is, you start with John Murphy's 10 Laws of Technical Trading.

In anticipation of your next question, here and now I present to you <fanfare> "John Murphy's Ten Law's of Technical Trading" with my strong recommendation that you read (or re-read) them and take everything in them to heart.

- Chip

John Murphy's Ten Laws of Technical Trading

1. Map the Trends

2. Spot the Trend and Go With It

3. Find the Low and High of It

4. Know How Far to Backtrack

5. Draw the Line

6. Follow that Average

7. Learn the Turns

8. Know the Warning Signs

9. Trend or Not a Trend

10. Know the Confirming Signs

"11."

Hello Fellow ChartWatchers!

Today we're taking the wraps off of our upcoming major upgrade to our ChartNotes annotation tool.  We've been working on this for a while now and we are getting close to releasing it out to everyone.  Even though it will probably be a couple more weeks before things are ready for release, I wanted to give you a sneak peek at some of the features that are headed your way soon.  Check out this screenshot:

In addition to all the new Fibonacci tools that we're adding, you'll also notice a new Triangle shape tool and the Quadrant Lines tool.  As you can see, this new version of ChartNotes is mostly about adding more drawing tools and capabilities.  There are several other new features that aren't shown on this chart.  I'll be posting more about those features, including our new Elliott Wave annotations feature, on the website later this week.

Again, these features aren't available on the website just yet - we have some internal testing to complete first.  Keep an eye out for more announcements on the "What's New" area of our website for more info on when ChartNotes v2 will be released.

- Chip

Hello Fellow ChartWatchers,

Today we're happy to announce the launch of our new tutorial video area.  You and find it at http://youtube.com/stockchartscom.  YouTube members can subscribe to that "channel" and get notified whenever we post a new one.  (We'll also announce new ones on the website...)  (...and on our Facebook page...)  (...and on our Twitter feed...).

The first video we created is an especially important one.  It's called "Getting Started with StockCharts.com" and it shows you seven important things that all StockCharts.com members should know about how to use their account effectively.

Topics include:

• Logging On and Off
• How to Use The SharpCharts Workbench
• Customizing Your Chart Settings
• Saving Custom Settings
• Annotating Charts
• ...and much more.

I strongly encourage everyone to review this video.  Even experienced StockCharts members may learn a thing or two.  Here it is:

(If you are unable to see this video inside the newsletter, click here to view it on the web.)

In addition to the "Getting Started" video, we've also added a "Behind the Scenes" look at our Computer Datacenter.  I'm also putting the finishing touches on a video entitled "Adding Overlays to Volume Bars" which should be available later this weekend.  We plan on doing lots of additional video in the coming weeks and months so stay tuned!

Oh, one last thing.  We're continuing to crank up our Facebook page and Twitter feed.  We've just completed our first free hat giveaway (watch for another one soon!) and we're currently running a fun little "Flash Poll" with the question being "How many people do you think work at StockCharts.com?"  If you are a Facebook user, please visit our page and click the "Like" button to get our latest updates.

- Chip

Hello Fellow ChartWatchers!

It's that time of year again:

Now through the end of August, StockCharts.com is running it's "End-of-Summer-Almost-Fall" special and this is a very special special indeed.  Here's the deal:

Subscribe to any of our services for six months and we will give you one addtional month for free!

Subscribe to any of our services for one year and we will give you THREE(!) additional months  for free!

Normally, our specials give you 2 months for free when you order a year of service.  This is the first time ever that we've given away 3 months of service with a 12 month order!

Let's do the math here.  If you subscribed on a month-to-month basis to our top-of-the-line "ExtraRT+Market Message" package, 15 months of service would cost you $45.90 x 15 = $688.50.  However, if you subscribe between now and the end of August, those same 15 months would only cost you $459.35, a savings of $229.15 which works out to 33.3% off.  It drops your per month cost from $45.90 down to $30.63 per month - less than the monthly cost for just ExtraRT by itself!

Looking at the other end of the spectrum, this means that you could sign up for "Basic", our least expensive package, for only $10.33 per month, saving up to $69.30 in the process.

To get started, simply click on this link and follow the instructions.  Better do it quick however, this special only lasts through the end of the month!

Now, I know what you are thinking:
   "Hey Chip!  What if I'm already a StockCharts Member?"

If you are already a member, I have even better news for you.  First off, you can extend your current subscription right now using these discounted rates to lock in the savings.  Why risk having your account expire during a non-special time period?  If your account is scheduled to expire within the next 12 months, I strong encourage you to take advantage of this deal now.

Second, have you been a StockCharts.com member for more than a year?  If so, you can save even more by using your StockCharts Loyalty Coupon.  The loyalty coupons can be used IN ADDITION TO THE SPECIAL DISCOUNT.  Click here to learn more about loyalty coupons and how to use them.

Throughout the year we have people ask us "When is the next special going to be?"  Now we finally have an answer - "Now."   Don't miss it.  Don't one of the people who writes in after the Special has ended.   Click here to lock in our best special deal ever.

- Chip

Hello Fellow ChartWatchers!

The market is trying to rise but bearish news keeps beating it down.  One of my favorite market indicators - the McClellan Summation Index - rose decisively above the 400 level at the end of July indicating that it was time to start looking for entry points again.  This week however a number of economic reports have kept the stock market in check.  While opinions are mixed on what next week will bring, I'm still encouraged by the fact that the Summation Index has continued its upward movement.

 (Click here for a live version of this chart.)

DON'T FORGET OUR TWITTER FEED AND FACEBOOK PAGE:  We are continuing to improve and expand how we get information out to our users.  Be sure to "follow" our Twitter feed (http://twitter.com/stockchartscom) and "friend" our Facebook page (http://facebook.com/stockchartscom) in order to get the latest info on StockCharts.com.  Just yesterday, we pointed our Twitter and Facebook fans to a terrific new article by John C. Lee entitled "How I Use Stockcharts.com".  Click on either link above to navigate to the article.

GREAT PUBLIC CHARTLISTS STILL EXIST!  We know that many of the ChartLists in our Public ChartLists area aren't the greatest.  We are constantly working with Public ChartList authors to "up their game" and provide their readers with great content.  As part of that effort, I wanted to single out two authors that have created some very nice new lists that everyone should check out.

Greg A. Neal's "IN THE MOMENT" list uses some of our newest features including overlaid area indicators and the Elder Impulse System to create some remarkable charts.  His clear annotations compliment the charts and help anyone see how he reaches his conclusions.

John Moschell's "Moschell's Charts" is another list that is clean, neat, and easy to understand.  His use of different trendline styles to define channels really sets his list apart.

There are many, many more great Public ChartLists out there besides these two.  You owe it to yourself to visit this free part of our website frequently.  And remember, if you see a ChartList that you like, don't forget to scroll down to the bottom and VOTE FOR IT.  The authors work hard and really appreciate you votes.

IMPROVING PERFORMANCE; IT TAKES TWO:  The biggest lesson to come out of all the comments that we received last week is that performance can vary widely depending on how your computer is set up.  When I asked for help tracking down a performance problem that Norton Security users had been reporting, I didn't expect the huge number of responses that were sent in - so thanks to everyone for that.  There's lots of great advice inside those comments for people that are seeing slowness with our website.  If trading is important to you, you owe it to yourself to review those comments and test out some of the ideas there.  Why continue to suffer with slow chart speeds when something as simple as installing Google Chrome or switching security software could speed things up by 2 or 3 times?

StockCharts is doing its part too in the battle for faster performance.  We are halfway through with the implementation of the XIP web acceleration service from InterNAP.  The feedback from last month's test was extremely positive and we hope that soon everyone will be seeing charts appear much faster.

Finally, don't forget to get out and enjoy the final few weeks of summer!

- Chip

Hello Fellow ChartWatchers!

Are you feeling more bullish now?  Last week's rallies have put some needed energy back into the traders that haven't gone on vacation this summer.  Technically the market is mixed and you can see evidence of that in the articles below - John Murphy talks about a positive development on the daily charts while Arthur Hill points out a negative sign on the latest monthly charts.  Clearly the markets have a ways to go before anyone can say a bull market has returned, but last week's trading was the first bullish action in a long time.

THE NEED FOR SPEED

Here at StockCharts, we are constantly looking for ways to get you our charts as quickly and consistently as possible.  Much of the past two months has been spent adding and testing two different "web acceleration" technologies to our site in an effort to reduce the time it take for our charts to move across the Internet.

The first technology we tried came from a company called Akamai.  While this technology works well for other websites and, at first, showed some promising results for us, when we dug deeper we discovered that it really wouldn't work well for us mainly because when the market is open our charts cannot be cached (i.e., saved for later reuse).

The second technology looks much more promising however.  It is called "XIP" and it comes from InterNAP, the same company that currently connects us to the Internet.  XIP dynamically adjusts the low-level settings that control how data flows across the Internet.  It works best when transmitting large items (such as a chart) across long distances.  The bigger the object and/or the longer the distance, the more XIP helps.

(Another really nice thing about XIP is that it doesn't require any changes to your computer - it's a change that we make here in our datacenter.  No install, no settings to mess with, just improved speed - pretty nice!)

At this point we've completed our internal testing of XIP and the results look good.  In our tests, XIP reduced the time it takes to send out our charts by 30 to 40% in most cases.  That said, we now need your help.  We want to make sure that if we switch to XIP it won't cause any problems for our users.

If you have a spare second this morning, please click on the following link and see if you have trouble seeing any of the charts on the page.  If any of the charts don't appear, please let us know.  If any of the charts take a really long time to appear, please let us know.  (If some of the charts appear 30 or 40% faster than they did before, please let us know too!)

Here's the link:  http://stockcharts.com/charts/gallery.html?VMW

Some of the charts on that page use the "old, standard" technology and at least one of them uses the new XIP technology.  See if you can see which is which just by refreshing the page.  Click here to send us your comments and thanks for helping us test this technology.

- Chip 

Hello Fellow ChartWatchers!

With the market posting four solid up days over the past week, is now the time to get back in to the market?  That's the main topic of this week's newsletter and there are lots of opinions going around right now.

One of the key things to watch for after a prolonged market decline are the major market breadth indicators like the NYSE Bullish Percent ($BPBYA) and the NYSE Summation Index ($NYSI).  Like all market indicators, these lines condense the movement of hundreds of stocks down into a single line that can be used as a proxy for the overall health of the market.

Here's a chart of the NYSE Summation Index (red) overlaid on top of the S&P 500 (black):

(Click here for a live version of this chart.) 

The horizontal line on that chart illustrates that, for the past couple of years at least, things always get "interesting" when $NYSI approaches the 400 level.  (The vertical scale for $NYSI is on the right, the scale for $SPX is on the left.)  Notice the behavior of $SPX whenever $NYSI moves above or below the 400 line - strong, long-term trends usually occur.  Granted, the signal usually happens well after the start of the trend, but that's always the tradeoff - early entry versus whipsaws.  If whipsaws aren't your cup of tea, the $NYSI at 400 signal should do well for you.

It also lends perspective to the current market rise.  With $NYSI currently at -215, it is too early to declare the return of a bull market.  That said, if the Summation Index continues to rise and breaks through 400 then greater optimism is definitely warranted.

- Chip

Hello Fellow ChartWatchers!

Now this will probably give away my age, but one of my first memories of television was from the educational children's show called "Sesame Street" and the song that they used to sing called "One of These Things is Not Like The Others".  In case you aren't familiar with this, click here to see the song performed by one of the show's biggest stars.

Granted, that game is seems pretty straightforward - even for a monster! - but I find myself thinking about that song every time I use our CandleGlance feature; especially when I use it in conjunction with our Sector Bullish Percent Charts:

These are nine of our sector-oriented Bullish Percent Indexes.  They are based on the P&F charts of hundreds of stocks and show the percentage of those stocks that have "bullish" P&F chart signals.  (For all the gory details, please see this article.)

But given this display, all we have to do is what Cookie Monster was doing - find the chart(s) that are behaving differently and see what that tells us about the market.

The first thing to notice is that almost all of the indexes have recently turned around and are moving higher - a very good sign for the market overall.  Looking closer you should see that the Energy index ($BPENER) is the only index that is currently higher than it's 50-day Moving Average (the red line).  Healthcare, Industrials and Materials are all positioned well above their 20-day Moving Average (the blue line) and just below their 50-day - a pretty good indication of strength returning to those sectors.  Consumer Discretionary, Consumer Staples, Financial stocks and Technology stocks currently have the weakest looking BPIs - while all are now moving higher, they are all still under (or just over) their 20-day Moving Average and haven't displayed the same kind of strength that the other sectors have.  You might also notice that the 20-day Moving Average for those stocks is still heading down which it has turned up for the others.

The fact that Consumer-oriented stocks as well as traditional bull-market sectors like Technology are still lagging should cause ChartWatchers to pause and reflect about the strength of the current rally.  I'll be watching our BPI CandleGlance page closely for signs of more participation by Consumer stocks (bullish) or weakness in the Energy and Financial sectors (bearish) in the coming days.

- Chip

Hello Fellow ChartWatchers!

Back down below 10,000 we go.  This is the fifth time in the past month that the Dow has dipped below that magic number.  The past four times resulted in quick rallies back above 10K - will that happen again on Monday?   Or have the bulls run out of ammunition?  Our experts below debate that very point in this edition of our newsletter.  Be sure to read their articles and then draw your own conclusions.

Here's a hint however:

The NYSE Bullish Percent is still up above 40 right which indicates that the Bulls are still hanging on.  If it falls below 30, then things could get ugly fast just like in mid-2008.  Next week should be very interesting.

CALLING ALL EAST COAST INVESTMENT CLUBS

In case you haven't heard, I've been traveling throughout the western part of the US giving presentations to various investment clubs about StockCharts and Technical Analysis.  I started in Portland, then Phoenix, then Dallas and most recently Calgary.  I'm off again next week to talk to the good folks at the Houston Investors Association.

So far, the feedback from my talks has been very positive.  I'd love to keep the ball rolling and I need your help to make that happen.  If you are a member of a large (50+ person) investment club that's based near the east coast of the US and your club is interested in having me come out and talk, please let me know via email - chipa@stockcharts.com.

Right now, I'm looking to schedule trips out there starting in August.  I hope to see you soon!

Hello Fellow ChartWatchers!

One of the more unexpected pieces of feedback that I've gotten as I have travelled around recently is that some people aren't reading our free Blog Articles because they associate blogs with rumor, innuendo, amateur writing, and lots of false information.   While that might be true of some blogs, rest assured that the free articles that we publish here at StockCharts.com in our "Blogs" section are not like that at all.

1.) Our Blog Articles are only written by staff members or people we have a very close working relationship with.

2.) Our Blog Articles are focused on charting, market analysis or the StockCharts website.

3.) We moderate all comments that get sent in about our Blog Articles to insure that they stay on-topic and don't contain mis-leading information.

4.) There is an educational aspect to everyone of our Blog Articles.

5.) We only post Blog Articles when we have something useful to say.

6.) Many Blog Articles contain charts that are linked directly to our website so that you can click on the chart and see how it was created.

7.) We publish several blog articles each day - over 2000 so far!

8.) New blog articles are announced in the "What's New" area of our homepage, on Twitter, and in our RSS feed as soon as they are published.

We know from our web stats that many people are not reading our free Blog Articles.  Please don't miss out on this very useful, free resource.  Simply click on the "Blogs" tab at the top of any of our pages to get started.  If you use an "RSS News Reader" program (more info), just point it to our RSS feed.

- Chip

Hello Fellow ChartWatchers!

There is a TON of great stuff happening at StockCharts.com right now.  First off, I want to make sure that everyone is aware that our SPRING SPECIAL is going on right now.  Subscribe or extend your account for 12 months and we'll give you 2 additional months for free!  (Subscribe of extend by 6 months and we'll give you 1 month for free.)  But please do not delay because unlike previous specials, this one will only last for ONE WEEK!  That means that you have to act before May 8th or you'll miss out.  Why not click here right now to take advantage of this fleeting offer?  Go ahead... We'll wait.

Are you back?  Good!  Now for the bigger news...

CATCHING AN IMPULSE

This week marks the debut of Dr. Alexander Elder in our ChartWatchers newsletter.  Dr. Elder's books are legendary - I honestly hope everyone has read at least one or two of them.  They can make anyone a better investor almost instantly.  I am thrilled to have him contributing to StockCharts.com now.

Dr. Elder's first contribution was to allow us to add his "Impulse System" of red, blue and green bars to our SharpCharts.  Here's an example of what a chart with "Elder's Impulse System" looks like:

To create one of these charts, just select "Elder's Impulse System" from the "Type" dropdown on the SharpCharts page (or just click on the chart above to see an example).  We've also created a new ChartSchool article that explains exactly what the colors mean and how they are arrived at.

When Dr. Elder saw his system on our site, he sent the following reaction: "It is a pleasure to see my Impulse System charts on the web for the first time!"   Both he and I hope that it can help ChartWatchers everywhere.

INTRO: HOW I MANAGED MY PICK

Today Dr. Elder is also joining us as a columnist.  He and Kerry Lovvom (a trader profiled in the book "Entries and Exits") currently run a website called SpikeTrade.com - a community of experienced stock traders.  Each weekend, he writes a column called "How I Managed My Pick" that is a review of a trade that he entered and exited during the previous week.  The column's goal is to educate people based on lessons of real-world experience.  I think all ChartWatchers can benefit from Dr. Elder's articles.  The article below was written on the first weekend in April.  Watch for more current offerings in future newsletters. - Chip

A RACE BETWEEN A TURTLE AND HARES - ALEX ELDER

I did not expect to choose a Gold pick this week.

I expected a difficult week ahead, with many crosscurrents. Also, Inna, my manager, was taking two days off, and I knew I would have to spend a lot of time in the office, distracted from the screen. I kept looking at attractive shorts and longs, but in the end decided to go with what I thought was a defensive pick - a gold stock, AUY, picked by Colin B. one of our traders here at SpikeTrade.com.

Here is the chart of AUY at the start of the week:

This daily chart shows a quad bottom. The three rightmost bars are Red. I love these false downside breakouts. The purple arrow indicates a potential bullish MACD divergence, and the text in the box reminds me that the Impulse system will go off Red if on Monday AUY trades at or above 9.81.

On Monday, AUY exploded on a gap, making me think I missed the boat, but on Tuesday it began to sag. As I lifted my head from Inna's work in late afternoon, I noticed that AUY had touched 9.80. I figured it would want to poke its toe a little lower and placed an order to buy at 9.79.

I usually do not discuss my trade sizing in these reports, but will do it now because it shows something useful about risk management. On Sunday, facing a busy week, I decided to risk only $500 on this trade. My initial plan was to enter at 9.85 with a stop at 9.61, risking 24 cents per share, allowing me to buy 2,000 shares.

I call this the Iron Triangle of risk control: you know you maximum risk, you know your risk per share, you divide A by B to get the permitted number of shares.

On Tuesday, buying at 9.79 with the same stop, my risk per share was only 18 cents. Dividing $500 total permitted risk by 18 cents allowed me to bump up the size of my trade to 3,000 shares. I placed an order with eTrade which allows me trade unlimited size for $7.99. My entry grade was 96%, meaning I just about caught the low of the day.

On Wednesday AUY rallied, then sagged, but kept above my entry level. I am a great believer in holding out for a good buy, and it paid off here.

On Thursday, the last day of this short week, AUY rallied with great conviction. I seriously considered making it a longer-term trade, but caution prevailed; I prefer not to carry SpikeTrade picks like this one over the weekend. With Inna back in the office and me being able to concentrate on the screen, I was watching the intraday charts. When I saw a bearish divergence on the intraday chart, I took profits at 10.14. The gain was $1,050.

The lesson of this trade is that in a market driven by heavy crosscurrents a cautious defensive pick may well be the best solution!

All the best,
Alex

For the past couple of months, I've been visiting with investments clubs around the country who have been gracious enough to invite me to talk.  So far I've talked with clubs in Portland, Pheonix and Dallas.  Calgary, Denver, and Houston are coming up with east coast cities to follow in the fall.

I wanted to show you a couple of the slides I used in my Dallas presentation yesterday and give you a pointer to our handout so that you were aware of some of the things in my talk even if you haven't attended one.  (At some point, I'll try and post the complete version of the presentation - but that won't be for a while.)

Above is our "top secret" back-of-the-napkin plan for ruling the world.  Basically, when John Murphy or Arthur Hill or I write market commentary, we try to make them timely, educational and based on tools that our readers have access to.

Did you know Point and Figure charts are like "scissor" lamps?  It's true!  When it is stretched out, it's like the trendlines on a regular bar chart.  When it is collapsed, those same trendlines become vertical columns on a P&F chart.

 Finally, here's a high-level process flow for doing technical trading:

My presentation then shows how many of our tools can be used to support this process.

- Chip

Hello Fellow ChartWatchers!

Is the two-month old rally coming to a end now that April has arrived?  The Dow's PPO is tantalizingly close to a bearish crossover right now.  Arthur Hill sees weakness in the S&P 500 while Tom Bowley still sees opportunities.  Read their thoughts below for more details.

The Road Ahead

At StockCharts, we are constantly improving the website.  Recently, we've begun transitioning from using Sun's Java to power our interactive tools to using Adobe's Flash.  There are several reasons for this change:

1. Flash works for more people - Our customer support team gets at least 4 or 5 complaints every week from someone having problems with Java that we can't solve.  So far, we have not had any complaints from someone who can't get Flash to work.
2. Flash starts faster - Most new people who visit our website have already visited a site with some Flash content, thus when they start a Flash program on our site, it starts very quickly.  Java can take up to 60 seconds to begin running our program.
3. Flash allows us to create richer, more interactive tools.  Flash provides us with better looking graphics and animation effects that we plan on incorporating into our tools very soon.
4. Because Flash is quicker to start, it can be integrated into other tools - specifically the SharpCharts workbench.  Check out my "Inspector" announcement below for an example.

We realize that for some people, running Flash-based tools presents a problem so for now we will continue to provide Java-based versions of our current tools as well.

During this transition, we have been working on a Flash-based version of our ChartNotes annotation tool.  The goal of that tool has been to copy the look and feel of the Java version as closely as possible.  At this point we think we've done that.  People who have used the Java version for years should be able to use the Flash version and feel right at home.  Please let us know if that is not the case.

Given that the Flash version and the Java version are almost identical, people have been asking "Which one should I use?  Why should I change over to Flash?"

At this point, everyone should be trying to use the Flash version of ChartNotes and only use the Java version if they experience problems.

"The Inspector" - The Start of an Exciting Future

As to "Why Should I Change to Flash Now?", a key reason is because a new feature will soon appear that you will probably want to use and that new feature relies on Flash's speed and better looking graphics capabilities.  We call it "The Inspector" and we are starting a Beta testing period for it today.

"The Inspector" allows you to mouse over ANY SharpChart and see the values of any point on the chart without needing to go into ChartNotes.  It gives you a set of light-gray, moveable crosshairs and a data box that follow your mouse when it is over the chart.

This screenshot doesn't really do it justice, you need to see it in action.  Fortunately, you can take The Inspector for a limited test drive by clicking here.

Because "The Inspector" is so small and fast, we are going to be able to "build it in" to the SharpCharts Workbench.  The idea is that soon all of the charts on the workbench page can be "inspected" just by mousing over them.  The current "test drive" page doesn't give you full access to the workbench yet, but it will soon.

We are still actively working on "The Inspector" and will probably make some changes before it is officially released.  Still we'd like to hear your feedback on this new tool and our new Flash-based direction.

Happy Easter everyone!
- Chip

Hello Fellow ChartWatchers!

The markets continue to rise impressively with the Dow closing higher for 13 of the last 16 days.  Arthur, John and the rest of the ChartWatchers team discuss that in more detail in just a bit.  I wanted to take some time to talk about six very important things that most people don't know about our website.

1.) You Can Get Notified As Soon As New Articles Are Posted -

Everytime a new article is posted on StockCharts (even this one!), we send out several notifications about via both Twitter and our RSS Feeds.  (Most articles also appear in the "What's New" section of the Home Page.)  If you want to say up-to-date with StockCharts, I strongly encourage you to either join our Twitter feed or you can point your News Reader program to our RSS Feed.

2.) Long Term Members Can Save Money Each Year They Renew -

Last year, we implemented a Loyalty Rewards Program that provides an ever increasing discount for our long-term subscribers.  For each year that you've been a member of StockCharts, we'll reduce your renewal cost by 1%.  The only "trick" here is that you need to remember to enter your loyalty coupon code into the renewal form before you renew.  For whatever reason, many people are not taking advantage of this deal - don't be one of them!  Before you renew, get your coupon code by clicking on the loyalty badge that is next to your name on the Members page.  Click here for more details.

(And please don't ask us to apply your discount after-the-fact.  It's just not possible.  You must enter it into the renewal form before you submit your renewal order.)

3.) Arthur Hill Has Been Improving Our ChartSchool Area -

Arthur has added lots of new articles to ChartSchool recently including ones on the Detrended Price Oscillator, Bollinger's %B, Cycle Line Analysis, the Raff Regression Channel and much more.  Be sure to revisit ChartSchool when you get a chance to learn even more about Technical Analysis.

4.) We've Posted Over 2100 High Quality Blog Articles Over the Past 13 Months -

Some people associate the word "blog" with low-quality, controversial sites that spread rumor and innuendo.  Don't mistake our blogs for those others.  The "Blogs" area at StockCharts.com only contains articles written by the StockCharts staff and a few select guest authors.  The articles are only about technical analysis and getting the most out of our website.  If you aren't reading our Blog articles, you are really missing out on getting the most from our website.  And most of our Blog articles are free!

Here are some great recent articles you may have missed:

What are ZigZag Retracements? from our MailBag blog
Pulte hits retracement resistance from our "Don't Ignore This Chart" blog
Scanning for "Near Crosses" from our "Scanning Stocks" blog
Now You Can Add Sector and Industries to your ChartLists from our "What's New" blog 

Be sure to read our Blogs every day.

5.) The Flash Version of ChartNotes is Almost Complete -

So far the feedback on our new Flash version of our ChartNotes annotation tool has been very positive.  We have added a couple more features like mouse-wheel and printing support and we think it is almost ready to replace the Java version.  For most people, it is faster and has fewer technical issues when they try to run it.  Let us know if there are any more kinks that we need to fix before it is officially released.

6.) Our Milestones Page Show You Our Long-Term History of Continuing Improvements -

Don't forget to visit our Milestones page from time-to-time.  It shows you all of the significant improvements we've made to the site since we started way back in 1999.

- Chip Anderson

Hello Fellow ChartWatchers!

We've been working hard the past couple of weeks to get better Sector and Industry classifications for the stocks in our database and today that work is finally starting to surface on the web site.

One of the big problems with Sector and Industry classifications is that there is no universally accepted standard for what constitutes a sector, what constitutes an industry and which stocks belong in which category.  The other big problem was that, until recently, the only source for that information was high-priced research firms that usually frowned on our request to make their classifications publicly available on our website.

Recently however Google has started publishing categorizations that they have derived from their search engine logic.  The Google classifications are very similar to the "typical" categories that most people are used to and the Google classifications have the additional advantage of not having the typical restrictions on republication.

So we are now - finally(!) - able to offer a broad set of Sector and Industry classifications for many of the stocks that we track.  We are now providing that information for over 5,000 different US stocks.  There are a couple of ways that information can be used:

• If you select the "Full Quote" option for any SharpChart, you will now see the Sector and Industry classification for that chart in the upper left corner of the Full Quote area:
  
  
   
• Extra members can also use our Advanced Scan Workbench to add Sector and/or Industry categories to their scans via the "Sectors and Industries" dropdown:
  
  
   
  
• User-defined Scan Results now include the Sector and Industry of each stock that is returned by the scan.
  (Note for Extra Users: Our old "SPGICS" sector and industry codes groups were out of date and could not be updated, so we are replacing them. If you have been using them in your saved scans, we'll automatically updated them so that they use our new Sector/Industry codes instead.)
  
   
• Extra members can also add all of the stocks that are in a Sector or Industry to one of their ChartLists using the "Add Tickers from -- Select --" box at the bottom of "Edit" view:
  
  

We will continue to expand both the number of stocks that we can reliably classify as well as the different ways Sector and Industy information can improve our charts and our scans.  We're looking into adding new MarketCarpets, CandleGlance Groups, Bullish Percent Indexes and more.  Stay tuned!

- Chip

Hello Fellow ChartWatchers!

Last time I talked about the great lengths that we go to here at StockCharts.com to make sure that our indicator values are calculated correctly.  This time I want to talk about how we work hard to make sure that the data used in those calculations is as accurate as possible.

First off, I want to talk about the differences between intraday data and daily data with respect to accuracy.  The key thing to keep in mind here is that after the stock markets close, the daily quote (open, high, low, close and volume) for each stock is audited by the exchanges.  That means that the people at the exchange go back and review all of the trades for each stock - tossing out any incorrect numbers - and then reissue the "official" values for open, high, low, close and volume for that stock.  In order to make sure we have the "official" numbers, we recollect the daily data from our data vendors several times each day after the market closes.  Our goal is to have "official" numbers in our database for every stock's daily values.

Having accurate daily values is important for several reasons:

• The exchanges try very hard to publish accurate daily quotes and we want to take advantage of their efforts.
• Daily data can be cross-checked from multiple public sources like Yahoo Finance and Bloomberg.
• Daily data is used to create weekly and monthly data bars.

The bottom line is that we work really hard to collect accurate daily data from our data vendors every trading day.  Intraday data is a completely different story however.

Unlike daily data, Intraday data "is what it is."  The exchanges do not audit intraday data values and issue corrections.  There aren't any other public sources where intraday data can be cross checked.  Intraday data is essentially a running record of what our data feed told us the stock was trading at during each minute of the trading day.  If a bad data point gets into the datafeed somehow, we faithfully record and preserve it.  Intraday data is the "chaotic wild west" of Wall Street.

That said, we still work hard to fix intraday data once it gets off the datafeed and into our databases (which happens after the markets close each day).  Once the data is "ours" we can go in a fix any blatantly obvious problems like spikes and dropouts.  Unfortunately, without anything else to compare our intraday data to, we often aren't sure if a spike is real or not.  In those cases, we'll err on the side of caution.

ADJUSTING HISTORICAL DATA

Let me state this clearly:  StockCharts.com adjusts our historical price data to eliminate the "artificial" effects of splits, distributions and dividends.

Those adjustments ensure that our technical indicators provide accurate signals at all times.  Without those adjustments, incorrect buy and sell signals would occur on our charts and in our scan results whenever a stock undergoes a split, dividend or distribution because those events cause gaps to appear on the chart.

When we first created this website, we consulted all of the experts we could find on this subject.  Should we adjust for splits?  What about dividends and distributions?  Should we adjust our data even for really small stuff that no one else notices?  "Adjust your data for everything no matter how small" they said.  Experts like Carl Swenlin and John Murphy were very clear - unadjusted data causes huge problems.  So we did.  And we have since the beginning over 10 years ago.  Our goal remains the same - adjust all historical data to eliminate those "artificial" gaps.

The downside to adjusting our data is that our charts should not be used to determine past buy and sell prices.  Often - around tax time - we get questions about this.  "My broker said I bought this stock at $50 but your chart shows that it was at $25 on that date."  Don't do that.  Your broker's records are for tax purposes.  Our charts are for technical analysis.

MAINTAINING DATA ACCURACY

Unfortunately, data accuracy is a never-ending struggle.  We have several people here dedicated to keeping our databases in synch with the hundreds of ticker changes and updates that happen "behind the scenes" each day.  One of the big benefits of using StockCharts.com is that you get all of those updates "for free" as part of our service.  But don't forget that there is effort - lots and lots of effort - going into keeping our data as accurate as possible.

And yes, from time to time we miss things.  We are always glad to hear from our users about a data issue that we can fix.  Anything that helps us improve our data accuracy is welcome.

So as I said last time, we are fanatical about accuracy here at StockCharts because we know that our users are also fanatical about accuracy.  And we will continue working hard to ensure that our charts remain the most accurate anywhere on the Internet.

- Chip

Hello Fellow ChartWatchers!

Here at StockCharts we are fanatical about accuracy.  Without accuracy, there would be no reason to use our website.  We work hard at it every day.  There are two key factors in creating the "cult of accuracy" we have here - first, you need accurate data; then you need accurate calculations.  If we get either of those things wrong, our charts suffer and your trust in us diminishes.

Data accuracy is a huge can of worms that I'm not going to address today.  I want to spend some time however on Calculation Accuracy because I can show you some specific cases where our Calculation Accuracy exceeds other websites out there.  Here is an article I wrote back in 2001.  Amazingly, it is still as valid today - 8 years later - as it was back then:

Recently, someone named "e91978" (really!) wrote us to inquire about our chart for QLGC. QLGC was closing in on its 200-day Exponential Moving Average and e91978 was trying to find out if it had closed above or below that indicator last Monday evening. The charts on their broker's website showed that QLGC was below its 200-day EMA while our charts showed it was above. Which was correct?

At first glance, a question like this may seem unimportant. But the question goes to the heart of an extremely critical aspect of Technical Analysis for, you see, many other indicators and overlays used by technical analysts are based on calculating one or more Exponential Moving Averages. If someone's EMA's are wrong, then you really should not trust any of their other indicators. With that in mind, e91978 had every right to be concerned.

The answer to the question lies in the way that Exponential Moving Averages are calculated. While calculating a 200-day Simple Moving Average is easy (add up 200 data points and divide by 200), calculating a 200-day Exponential Moving Average is much trickier. What most people don't know is that, in theory, every closing price a stock has ever had should be used to calculate any EMA for that stock no matter what the EMA's period is! See our ChartSchool article on Moving Averages for the gory details.

Bottom Line: The less data you use in your calculation, the less accurate your results.

Because some stocks have data going back to the 1920's or earlier, and because the effect of data from many years ago diminishes over time, most high-performance charting programs - including ours - actually estimate the true EMA by performing the calculation on a subset of the stock's data. If you go back far enough, the estimated EMA will be accurate to within a fraction of a penny. The trick is knowing how far back is "good enough" - StockCharts is very conservative here, using more data than our competitors to make sure that our calculations are correct. Thanks to e91978, here's the proof:

Click here to download the entire spreadsheet.

First off, I created an Excel spreadsheet that contains all of the data for QLGC going back to when the stock IPO'ed in 1998. I then had Excel calculate a running 200-day EMA for the stock all the way up until Nov. 26th, 2001 (column C above). The value Excel came up with was 45.72894008.  I'm going to consider that to be the "true" EMA value.

Data errors can often throw off sensitive EMA calculations, so next I collected QLGC data from an independent source (Yahoo.com) and had Excel perform the same calculations (column I above). Excel's Yahoo-based 200-day EMA value was 45.72987435 - a difference of 0.000934269 - which is very close to the first value.

On Nov. 26th, 2001, QLGC closed at 46.24 - fortunately all of the charting sites did agree on that! Now, 46.24 is clearly higher than then values that Excel calculated for the "true" 200-day EMA. Let's see what some of the common charting sites displayed on that date:

Look familiar? Look closely at the top chart. That is the chart that you get when you use the default settings and add a 200-day EMA. First off, we can't be sure what the 200-day EMA value is since it isn't displayed. However, in the top chart, QLGC closed clearly below the line. Now look at the chart on the lower left. That is a blow-up of a 2-year chart. Notice that now QLGC closes right on top of the EMA - the EMA must have moved! Finally look at the chart on the lower right. This is a blow-up of a 5-year chart. Wow! Now the EMA is (correctly) below the closing price! Obviously, the longer the chart, the more accurate the result - but that's not the way things should work!

The chart above is what e91978 was looking at. It's even harder to tell what the value of the EMA is since the axis values are on the left side of the chart, but this chart's EMA is also clearly above the closing price (wrong!). A blow-up of a 2-year chart is in the upper right corner - again, the EMA appears to have moved!

One last example, this is from an "interactive" Java charting tool. The problem is that both the code for the tool and the data for the chart has to be downloaded into your computer before the chart can appear. To minimize delays, they minimized the amount of data that they initially download, thus maximizing the potential for EMA errors. The top chart shows the default view of things. Note that the 200-day EMA line doesn't start until mid-September and the close is once again in the wrong position. It was a struggle, but I was finally able to get the tool to load lots of data but only display the last couple of months. Once that was done, a fairly accurate 200-day EMA line appeared (bottom).

2010 UPDATE

The charting site that e91978 was using back in 2001 still doesn't get it.  Here's their 3-month chart of QLGC from this Friday followed by their 6-month version of that same chart:

All I did was change the chart's setting from 3-months to 6-months.  Notice that the green 200-day EMA was very close to 16.00 on the top chart but then has moved up to near 16.50 on the bottom  chart?  That's a huge difference!   So where should the 200-day EMA be?  Here's a hint.

Remember folks, many other important technical indicators are derived from EMAs including the MACD, the PPO, the Percentage Volume Oscillator, the Chaikin Oscillator and the McClellan Oscillator. I'll say it one last time - Incorrect EMAs mean incorrect charts.

- Chip Anderson

Hello Fellow ChartWatchers!

I am thrilled to officially announce that StockCharts.com now provides free real-time charts and quotes for everyone!

Thanks to the BATS exchange and the fine folks at IDC/Comstock, our free users and our Basic and Extra members are now able to see charts based on non-delayed price data during market hours. The data comes directly from the BATS exchange and we highlight it in yellow on our charts.

While that change is very exciting, it is important to keep in mind several differences between real-time data from BATS and the "official" real-time data from the NYSE, Nasdaq and TSX exchanges (which our "ExtraRT" subscribers see).  Those differences include:

• The "real real-time" data that ExtraRT subscribers see comes directly from the NYSE, Nasdaq, or TSX stock exchanges.  It is the "official" data for a particular stock.  If you place a typical trade order with your broker, they will execute the trade using those prices.

• The "free real-time" data that appears on our non-ExtraRT charts comes from the BATS exchange.  The data is often very similar to the "official" data from the major exchanges, but there can be small differences in prices.  The volume information that the BATS exchange provides is much, much lower than the volume data from the major exchanges.

• Because "free real-time" data is different from the "official" data, we highlight it in yellow on our charts.  Real real-time data is highlighted in green.

• We only display "free real-time" data for 20 minutes on our charts,  After that, we replace the "free real-time" bar(s) with delayed "official" bars from the major exchanges.  For 1-minute and 5-minute charts, we place a vertical, dashed yellow line on the chart to show where the free real-time bars end and the official bars begin.

• We do not display volume information with the free real-time bars because the volume data from the BATS exchange is so much smaller than the official volume data.  We also do not display any volume-based indicators in the "free real-time" section of the chart.

• Not all stocks that we track have free real-time data available for them.  There is no free real-time data currently available for Canadian stocks or for Pink Sheet stocks.  Other thinly traded stocks will probably also not have BATS data either.

Here is what a 1-minute BATS real-time chart looks like on our website when the market is open:

The dashed yellow line is the dividing line between the BATS data (on the right) and the official NYSE data (on the left).  As time goes on, we update this chart in two ways:

1. We update the most recent bar (on the far right) with BATS data - adding new bars as necessary.
2. We replace the oldest BATS bar (the one next to the dashed yellow line) with official NYSE data as soon as possible; after 15 minutes in this case.

This chart also shows how we do not display volume or volume-based indicators like the CMF for the BATS part of the chart.

5-minute charts work very similar to the chart above.  Longer period charts however will not display the dashed yellow line because they only have one BATS-based bar.  Those charts - including the daily and weekly charts that free users see - are based on real-time quotes from the BATS exchange and the phrase "+ BATS" appears next to the exchange label in the upper left corner of the chart.

In summary: if you need real-time data for ALL stocks (including Canadian stocks), you'll still need to subscribe to our ExtraRT service.  If you need to see real-time volume information, you'll still need to subscribe to our ExtraRT service.  But, if those things aren't important, our new BATS-based real-time charts should work well for you and save you some money.

Enjoy! and let us know what you think of the change.
- Chip

(Note: If you currently subscribe to ExtraRT and would like to downgrade to the less expensive Extra + BATS service, please watch the "What's New" area of the homepage next week for an announcement about how to do that.)